Considered and decided by Lansing, Judge, Klaphake, Judge, and Peterson, Judge.

S Y L L A B U S

A partner who performs services for a partnership may be considered an employee of the
partnership for purposes of determining the partnership's obligation to make contributions to the
reemployment compensation fund with respect to wages paid for employment where the partnership
agreement creates an employment relationship under the law of master and servant.

O P I N I O N

PETERSON, Judge

Relator WBC Construction challenges the determination of the representative of the Commissioner
of Economic Security that an employer-employee relationship existed between WBC Construction
and Eric J. Jenson and all other construction workers who performed services for WBC
Construction according to the provisions of a partnership agreement. We affirm.

FACTS

In 1995, Eric J. Jenson began working as a construction laborer for Trendsetters Construction Co.,
which was a partnership owned by Dennis Westrom and his two sons, Torrey and Trevor
Westrom. Trevor Westrom was the managing partner and had the right to control the means and
manner of the construction workers' performance, including the authority to control (1) when,
where, and how the work was to be performed; (2) the number of hours worked and what time of
day the work would begin and end; (3) the worker's hourly wage; and (4) the discharge of
workers.

On April 1, 1996, Trevor Westrom met with Trendsetters' construction workers, including Jenson,
and presented the W B C Worker Built Company Construction Partner Agreement, which was a
partnership agreement for a new company, relator Worker Built Company (WBC) Construction.
The only partner identified in the partnership agreement was Trevor Westrom, who was named as
senior partner. Jensen and several other construction workers each signed a separate copy of the
partnership agreement. Under the agreement, upon paying five dollars, each construction worker
was entitled to a one-percent ownership interest in WBC for the purpose of furnishing his labor and
ability at a contract rate that would be determined based on an average 45-hour work week. The
partnership agreement stated that the one-percent partners would be reimbursed on a square-foot
basis determined by the bid for each project but that draws would be taken at a rate of $1.50 per
unit of project time. Any excess project income was to be divided among partners who worked full
time and completed the project based on each partner's hourly contribution. The agreement
required partners who voluntarily quit to give a two-week notice to avoid possible penalties and
provided that the partnership could purchase equipment or property only upon a unanimous vote of
approval by the partners. The partnership agreement also provided that:

The senior partner has all rights to admit or dismiss anyone at anytime, based on
qualifications, policies, conduct, workmanship, and partnership agreement. He also
will establish each and all partners [sic] reimbursement amount along with deciding
and bid[d]ing and signing all project contracts. He will establish and administer all
policies.

The senior partner is authorized to handle all banking. Banking to include checking
account and all checks and transactions for company. The senior partner will handle
all job bids, proposals, and acceptances.

Following the creation of WBC Construction, and until Jenson voluntarily quit, WBC only
contracted to provide labor for projects that Trendsetters Construction Co. lined up as a general
contractor. Jenson and the other construction workers were paid bi-weekly based on the number of
hours they worked and a rate determined by Trevor Westrom.

In March 1999, respondent Department of Economic Security issued a determination that an
employer-employee relationship existed between WBC Construction and Jenson and the other
laborers who provided similar services under the partnership agreement. The department
determined that WBC was required to make contributions to the reemployment insurance fund with
respect to wages paid to Jenson and the other laborers. WBC appealed the department's
determination. Following a hearing, a reemployment insurance judge affirmed the department's
determination. WBC appealed to the Commissioner of Economic Security. The commissioner's
representative issued a decision affirming the reemployment insurance judge's determination. The
commissioner's representative concluded:

Trevor Westrom dba WBC Construction is a liable employer subject to the
provisions of the Minnesota economic security law. Trevor Westrom dba WBC
Construction has had an employment relationship with Eric J. Jenson and any other
construction worker who has performed services subject to the provisions of the W
B C WORKER BUILT COMPANY Construction Partner Agreement referenced
herein. Trevor Westrom dba WBC Construction shall be assigned the tax rate for
new employers in the construction industry.

I S S U E

Was there an employment relationship between WBC Construction and the construction workers
who performed services pursuant to the W B C Worker Built Company Construction Partner
Agreement?

ANALYSIS

1. Existence of Employment Relationship

An employer must make contributions to the reemployment insurance fund with respect to wages
paid for employment. Minn. Stat. § 268.06, subd. 1 (1996). [1]

Employment means:

(1) Any service performed * * * by;

* * *

(d) any individual who is a servant under the law of master and servant or who
performs services for any employing unit, unless such services are performed by an
independent contractor.

Employing unit means any individual or type of organization, including any
partnership * * * which has or subsequent to January 1, 1936, had in its employ
one or more individuals performing services for it.

Whether a worker is an employee or an independent contractor involves a mixed
question of law and fact. Once the controlling facts are determined, the question
whether a person is an employee becomes one of law.

Citing Pederson v. Pederson, 229 Minn. 460 39 N.W.2d 893 (Minn. 1949), WBC argues that
Jenson cannot be considered an employee of WBC because he was a partner in WBC and a
partner is not considered an employee of a partnership. WBC contends that the commissioner's
representative erroneously focused its consideration on whether Jenson was an employee or an
independent contractor rather than determining whether he was a partner. We disagree.

The issue in Pederson was whether Pederson, a partner who was injured while performing services
for the partnership, was an employee of the partnership for purposes of the workers' compensation
act. Id. at 462, 39 N.W.2d at 894. The court acknowledged that the great weight of authority is
that a partner is not an employe of a partnership. Id. But the court then applied the tests laid down
in independent contractor-employee cases to the facts before it and concluded that the partnership
was not an employer as to Pederson since indicia of an employer-employe relationship, on which
liability attaches, do not exist. Id. at 465, 39 N.W.2d at 896. The court explained that although
there are instances where a partnership is regarded as an entity,

it would violate sensible rules of statutory construction to hold that in the case at bar
the * * * partnership is an entity as an employer of Pederson, where the partnership
agreement between Pederson and [the other partner] has not created the incidents
of the relationship of employer and employe.

Id. at 466-67, 39 N.W.2d at 897. The court concluded, this contract of partnership did not create
the relation of employer-employe. Id. at 467, 39 N.W.2d at 897. The court did not conclude that
a partner could never be an employee of a partnership.

The Pederson court's reasoning indicates that a partner can be an employee of a partnership, and
that it is appropriate to apply the law of master and servant to determine whether a partnership
agreement has created an employer-employee relationship between a partnership and a partner.
The commissioner's representative determined that under the law of master and servant, Jenson and
the other one-percent partners were employees of Trevor Westrom dba WBC Construction.

The factors applied under the law of master and servant to distinguish an employee from an
independent contractor are:

(1) The right to control the means and manner of performance; (2) the mode of
payment; (3) the furnishing of material or tools; (4) the control of the premises
where the work is done; and (5) the right of the employer to discharge. In
determining whether the status is one of employee or independent contractor, the
most important factor considered in light of the nature of the work involved is the
right of the employer to control the means and manner of performance.

 * * * The distinction between an employee and an independent contractor may be
said to consist largely in the difference between one who undertakes to achieve a
given result under an arrangement with another who has authoritative control over
the manner and means in which and by which the result shall be accomplished and
one who agrees to achieve a given result but is not subject to the orders of another
as to the method or means to be used. While the right to terminate the arrangement
is an important factor in determining the relationship of the parties, it alone is not
conclusive.

The WBC Construction partnership agreement gave Trevor Westrom, as senior partner, authority
to establish and administer all policies. Because he had authority to establish and administer all
policies, Trevor Westrom had control over the premises where the work was done and
authoritative control over the manner and means by which partners accomplished a given result. By
delegating to Westrom the authority to establish and administer all policies, the one-percent partners
became subject to Westrom's orders regarding the method or means of performance and all other
matters. In addition, the partnership agreement explicitly gave Trevor Westrom authority to dismiss
any employee.

WBC contends that the commissioner's representative's decision implies that WBC was a sham
partnership. WBC argues that the key to determining that it is a valid partnership is that profits were
shared among the partners. But even if WBC is a valid partnership, the mode of payment is only
one of the factors used under the law of master and servant to determine whether an employment
relationship exists. Other factors, including the most important factor, the right to control the means
and manner of performance, indicate that Jenson was an employee of WBC.

The commissioner's representative's determination that an employment relationship existed between
WBC Construction and Eric J. Jenson and all other construction workers who performed services
for WBC Construction according to the terms of the construction partnership agreement was not
erroneous.

2. Credibility Determinations

WBC argues that the commissioner's representative's findings are erroneous because Jenson's
testimony at the August 3, 1999, hearing before the reemployment insurance judge contradicted the
testimony he provided in a December 16, 1998, deposition. We defer to the commissioner's
representative's credibility determinations. Portz v. Pipestone Skelgas, 397 N.W.2d 12, 14
(Minn. App. 1986). A decision regarding the credibility of witnesses rests within the discretion of
the Commissioner, and the testimony should not be reweighed on appeal. Youa True Vang v. A-1
Maintenance Serv., 376 N.W.2d 479, 482 (Minn. App. 1985) (citation omitted). Because the
record contains evidence reasonably tending to support the factual findings of the commissioner's
representative, we will not disturb those findings on appeal.

3. Scope of Award

WBC argues that even if Jenson was an employee of WBC, there is insufficient evidence in the
record from which the commissioner's representative could have concluded that the other
construction workers who signed the partnership agreement were also employees of the
partnership. We disagree.

The record reflects that the other construction workers each signed a copy of the partnership
agreement to form WBC. Because the partnership agreement gave Trevor Westrom the right to
control the means and manner of the other workers' performance, the right to control the premises
where the other workers worked, and the right to discharge workers, the commissioner's
representative did not err by determining that the other workers who signed the partnership
agreement also had an employment relationship with WBC.

D E C I S I O N

Because the terms of the partnership agreement gave Trevor Westrom authority to control the
means and manner by which the one-percent partners performed services for WBC, the right to
control the premises where the one-percent partners worked, and the right to discharge the
one-percent partners, Jenson and the other one-percent partners were employees of WBC.